Infomed Buyer/Seller

Calgary Real Estate News

Calgary sets new April record as benchmark price hits $550,800

The Calgary Real Estate Board says the city set a new April record last month as the benchmark price of a home sold reached $550,800.

The Alberta board says the price amounts to a two per cent increase from March and a 1.19 per cent increase from a year ago.

The increase in the benchmark price came as the actual average price of a home sold in the city last month was $549,524, a roughly three per cent rise from a year ago.

The board says the number of sales tumbled almost 21 per cent to 2,690 over the same period, leaving the market with tighter conditions than were seen earlier in the year and when compared with April.

New listings fell nearly 32 per cent since last April to 3,133.

While sales activity is at a level the board expected, Ann-Marie Lurie, the Calgary board’s chief economist, says the steeper pullback in new listings has ensured that supply levels remain low.

“The limited supply choice is causing more buyers to place offers above the list price, contributing to the stronger than expected gains in home prices,” Lurie said in a statement.

-Canadian Press

Calgary Real Estate News

Tax-Free First Home Savings Account is launching: Here are the basics

Canadians could soon get some assistance when it comes to buying a home when the federal government’s Tax-Free First Home Savings Account (FHSA) launches on April 1.

The program was announced in the 2022 federal budget and is aimed at helping first-time homebuyers jump into Canada’s pricey housing market.

Here’s what you need to know about the savings vehicle that’s set to launch on Saturday.

WHAT’S A FHSA?

The FHSA is a mix between a Registered Retirement Savings Plan (RRSP) and Tax-Free Savings Account (TFSA), but it’s specifically geared towards saving for a house.

Contributions to an account would be tax-deductible and withdrawals to buy a home would be non-taxable.

In order to qualify for an account, an individual must be a Canadian resident between the ages of 18 to 71 and a first-time homebuyer. In some provinces where the legal age to enter a contract is 19, residents will have to wait until that age to open an account.

If you end up becoming a non-resident of Canada after you’ve already opened a FHSA, you can participate normally in contributions; however, you cannot make a withdrawal to buy or build a home while you’re not a Canadian resident.

There will be an $8,000 annual contribution limit, but unused portions of a yearly contribution can be carried forward into the next year. The lifetime FHSA limit is $40,000.

The account can remain open until the 15th anniversary of opening it, until the person turns 71, or the year following a person’s first qualifying withdrawal of their FHSA, whichever comes first.

INVESTMENTS AND WITHDRAWALS

Canadians can have the same kind of investments as a TFSA, in their First Home Savings Account. This means you can hold assets such as publicly traded securities, mutual funds and bonds.

However, when it comes time to withdrawing funds from the FHSA, there are a few requirements that must be met.

The property the funds are being used to purchase has to be in Canada, the taxpayer has to intend on living in that house as their principal residence and they need to have a written agreement to buy or build a qualifying home before Oct. 1 of the year following the withdrawal.

It’s worth noting that anyone who has funds in both a FHSA and the Home Buyers’ Plan wouldn’t be permitted to make withdrawals from both accounts for the same home purchase.

If you end up transferring more than your FHSA contribution room for that year, you will generally have to pay a one per cent tax per month on the highest excess amount in that month.

The federal government’s website said Canadians can remove excess FHSA amounts by: “Making a withdrawal of a designated amount  from your FHSAs (designated withdrawal), or making a direct transfer of a designated amount from your FHSAs to your RRSPs or RRIFs  (designated transfer), or making a taxable withdrawal from your FHSA, or any amounts deemed to be included in income if the account loses its status as an FHSA.”

TAX SEASON

While we are in the middle of tax season, Canadians should take note that contributions to your FHSA during the first 60 days of the year are not deductible on the previous year’s income tax return.

The federal government’s website added that “You also cannot claim a tax deduction for any FHSA contributions that you make after your first qualifying withdrawal.”

https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/first-home-savings-account.html

While contributions to a FHSA are usually deductible, if Canadians are planning to transfer from their RRSP to the housing account, it will not be deductible.

ENOUGH FOR A DOWN PAYMENT?

Tim Cestnick, co-founder and CEO of Our Family Office, said the FHSA was a great idea from the federal government, but he doesn’t know how much it will help the average Canadian buying a home.

“Forty-thousand dollars is not going to be enough to really act as a down payment in most cases,” Cestnick said in a phone interview last August.

“Most of the time you’re going to need to put down 10 per cent and there’s not too many homes that you can buy for $400,000 in Canada right now, it’s certainly in the major cities like Toronto and Vancouver, where it’s going to be tough to save enough for a full down payment.”

However, Cestnick said all first-time homebuyers should think of setting up an account, regardless if they end up using it.

“I think it’s a no brainer for first-time homebuyers to set up the account because it doesn’t hurt you in any way,” Cestnick said.

“You can pull money out tax-free if you buy a home, if you don’t, that money goes into your RRSP and those are both good options.”

-Hilary Punchard, BNN Bloomberg

Calgary Real Estate News

The Bank of Canada Holds Rates Steady Even As the Fed Promises to Push Higher

As expected, the central bank held the overnight rate at 4.5%, ending, for now, the eight consecutive rate increases over the past year. The Bank is also continuing its policy of quantitative tightening. This is the first pause among major central banks.

Economic growth ground to a halt in the fourth quarter of 2022, lower than the Bank projected. “With consumption, government spending and net exports all increasing, the weaker-than-expected GDP was largely because of a sizeable slowdown in inventory investment.” The surge in interest rates has markedly slowed housing activity. “Restrictive monetary policy continues to weigh on household spending, and business investment has weakened alongside slowing domestic and foreign demand.”

In contrast, the labour market remains very tight. “Employment growth has been surprisingly strong, the unemployment rate remains near historic lows, and job vacancies are elevated.” Wages continue to grow at 4%-to-5%, while productivity has declined.

“Inflation eased to 5.9% in January, reflecting lower price increases for energy, durable goods and some services. Price increases for food and shelter remain high, causing continued hardship for Canadians.” With weak economic growth for the next few quarters, the Bank of Canada expects pressure in product and labour markets to ease. The central bank believes this should moderate wage growth and increase competitive pressures, making it more difficult for businesses to pass on higher costs to consumers.

In sum, the statement suggests the Bank of Canada sees the economy evolving as expected in its January forecasts. “Overall, the latest data remains in line with the Bank’s expectation that CPI inflation will come down to around 3% in the middle of this year,” policymakers said.

However, year-over-year measures of core inflation ticked down to about 5%, and 3-month measures are around 3½%. Both will need to come down further, as will short-term inflation expectations, to return inflation to the 2% target.

Today’s press release says, “Governing Council will continue to assess economic developments and the impact of past interest rate increases and is prepared to increase the policy rate further if needed to return inflation to the 2% target. The Bank remains resolute in its commitment to restoring price stability for Canadians.”

Most economists believe the Bank of Canada will hold the overnight rate at 4.5% for the remainder of this year and begin cutting interest rates in 2024. A few even think that rate cuts will begin late this year. 

In Congressional testimony yesterday and today, Federal Reserve Chair Jerome Powell said that the Fed might need to hike interest rates to higher levels and leave them there longer than the market expects. Today’s news of the Bank of Canada pause triggered a further dip in the Canadian dollar (see charts below). 

Fed officials next meet on March 21-22, when they will update quarterly economic forecasts. In December, they saw rates peaking around 5.1% this year. Investors upped their bets that the Fed could raise interest rates by 50 basis points when it gathers later this month instead of continuing the quarter-point pace from the previous meeting. They also saw the Fed taking rates higher, projecting that the Fed’s policy benchmark will peak at around 5.6% this year. 

Bottom Line

The widening divergence between the Bank of Canada and the Fed will trigger further declines in the Canadian dollar. This, in and of itself, raises the Canadian prices of commodities and imports from the US. This ups the ante for the Bank of Canada.

The Bank is scheduled to make its next announcement on the policy rate on April 12, just days before OSFI announces its next move to tighten mortgage-related regulations on federally supervised financial institutions.

To be sure, the Canadian economy is more interest-rate sensitive than the US.  Nevertheless, as Powell said, “Inflation is coming down, but it’s very high. Some part of the high inflation that we are experiencing is very likely related to a very tight labour market.”

If that is true for the US, it is likely true for Canada. I do not expect any rate cuts in Canada this year, and the jury is still out on whether the peak policy rate this cycle will be 4.5%.

Dr. Sherry Cooper
Chief Economist, Dominion Lending Centres

Calgary Real Estate News

HOW’S THE MARKET

After what was one of Alberta’s strongest Novembers on record for sales, we are heading into December with the lowest inventory levels in November since 2005!

The migration into Alberta continues as the population has grown to 4,543,111 which is just about 100,000 more people since the third quarter of 2021. This is putting pressure on the rental market with inventory levels well below the same time as last year, and rent prices climbing as a result. The affordability of housing compared to other major cities in Canada, along with the opportunity for jobs is continuing to keep our Province as a major draw for people to move to.

Looking back at sales in Alberta over the top five Novembers in the past ten years, the sales volume dropped through December and January, recovering to numbers higher than Novembers sales in February of the New Year. The listing inventory for those same years also dropped through December to February, recovering to higher inventories by March the following year. Over the past decade, 50% of time the average price across Alberta dropped from November through to January and then recovered to a higher average price in February than what was recorded the November prior. In that same decade, there were two years where prices increased by January, one year was in March and the other in May.

ALBERTA SHOWINGS

When we look at the showings for listings across the Province, the trends show that sellers may get one more uptick of activity this coming weekend before the Holiday slow down occurs. 

CIR REALTY SHOWINGS

The showings at CIR Realty’s listings are also showing slowing activity but the inventory under $300,000 had an increase of activity. This is likely due to higher interest rates forcing buyers to explore lower price ranges. The showings resulting in transactions is still higher than average for the year sitting around 18%, but that number is dropping week over week.

Summary

Based on all of the information above, it is reasonable to conclude that if sellers want to sell in the coming months they will need to have a compelling price for buyers. If there is a time for buyers to take advantage of lowering price points, it will likely be in December and January as markets move into balanced and in some cases, buyers markets. But we anticipate sales to increase from February through Spring with the caveat being how low the listing inventory gets as we normally don’t see listings start to climb higher until March. Without inventory, we may see lower sales numbers for longer which will keep more competitive conditions in the market. 

With population increasing, rentals being competitive, sales remaining strong and low inventory levels, it is setting us up for a competitive Spring Market in the New Year.

-Steve Phillips, CIR Realty

Calgary Real Estate News

Canada’s slumping housing market weighs on Home Capital’s loans

The tumult in Canada’s housing market is starting to take its toll on lenders, with Home Capital Group Inc. reporting a plunge in third-quarter originations.

Home Capital, which lends largely to borrowers considered somewhat riskier than prime customers, said Tuesday that single-family mortgage originations plummeted 28 per cent from a year earlier. The lender’s so-called Alt-A borrowers include self-employed workers or those who are new to Canada and don’t have extensive credit histories. Total mortgage originations fell 23 per cent to $1.85 billion (US$1.38 billion), missing the $2.5 billion estimate of Royal Bank of Canada analyst Geoffrey Kwan. 

Sales activity in Canada’s housing market has slowed, with transactions down 32 per cent in September from a year earlier, as the Bank of Canada’s aggressive rate-hiking campaign ratchets up mortgage costs. Prices have fallen for seven straight months, and are down almost 9 per cent from their peak.

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The market spiral had yet to make its way to lenders’ results, with Canada’s biggest banks all reporting growth in their mortgage books in their most recent earnings. Home Capital’s results provide a window into a segment of borrowers who are considered riskier than those the big banks typically take on, and therefore pay more to borrow.

“The housing market is currently in a period of transition as buyers and sellers adjust to a higher-interest-rate environment,” Home Capital Chief Executive Officer Yousry Bissada said in a statement, adding that the Toronto-based company expects “softer market conditions to persist in the near term.”

The drop in originations contributed to Home Capital’s net income falling 43 per cent to $31 million, or 77 cents a share. Excluding some items, profit was 95 cents a share, matching analysts’ estimates.

Home Capital’s shares fell 4.8 per cent to $25.23 at 10:32 a.m. in Toronto, bringing their decline this year to 35 per cent. That’s the fourth-worst performance in the 29-company S&P/TSX Financials Index. 

Despite the market turmoil, Home Capital’s borrowers have continued to make payments on their mortgages. Net non-performing loans accounted for 0.16 per cent of gross loans last quarter. That compares with 0.15 per cent a year earlier and 0.47 per cent in the same period in 2020.

-Bloomberg

Calgary Real Estate News

Winter Checklist

  • Check and clean or replace furnace air filters each month during the heating season. Ventilation systems, such as heat recovery ventilator filters, should be checked every two months.
  • After consulting your hot water tank owner’s manual, drain off a dishpan full of water from the clean-out valve at the bottom of your hot water tank to control sediment and maintain efficiency.
  • Clean your humidifier two or three times during the winter season.
  • Vacuum bathroom fan grills to ensure proper ventilation.
  • Vacuum fire and smoke detectors, as dust or spiderwebs can prevent them from functioning.
  • Vacuum radiator grills on the back of refrigerators and freezers, and empty and clean drip trays.
  • Check gauges on all fire extinguishers, and recharge or replace as necessary.
  • Check fire escape routes, door and window locks and hardware, and lighting around the home’s exterior. Ensure your family has good security habits.
  • Check the basement floor drain to ensure the trap contains water. Refill with water if necessary.
  • Monitor your home for excessive moisture levels – for instance, since condensation on your windows can cause significant damage over time and pose serious health problems, this requires corrective action.
  • Check all faucets for signs of dripping and change washers as needed. Faucets requiring frequent replacement of washers may be in need of repair or replacement.
  • If you have a plumbing fixture that’s not used frequently, such as a laundry tub or spare bathroom sink, tub or shower stall, briefly run some water to keep water in the trap.
  • Clean drains in the dishwasher, sinks, bathtubs and shower stalls.
  • Test plumbing shut-off valves to ensure they’re working and to prevent them from seizing.
  • Examine windows and doors for ice accumulation or cold air leaks. If found, make a note for repair or replacement in the spring.
  • Examine attic for frost accumulation. Check roof for ice dams or icicles. If there’s excessive frost or staining of the underside of the roof, or ice dams on the roof surface, be sure to have an expert look into the issue.
  • Check electrical cords, plugs and outlets for all indoor and outdoor seasonal lights to ensure fire safety. If showing signs of wear, or if plugs/cords feel warm, replace immediately.
Calgary Real Estate News

CREB® 2022 Forecast: Calgary housing market expected to remain strong this year after record-breaking 2021

According to the report, housing market activity in 2022 is expected to moderate relative to record levels of activity in 2021, while remaining stronger than historical levels.

“Despite challenges with COVID-19, we are starting to see a turnaround in our job and migration numbers, and while interest rates are expected to rise, they remain relatively low. All these factors are expected to support strong housing demand into 2022,” said CREB® Chief Economist Ann-Marie Lurie. 

“The biggest question will be whether supply can meet that demand. It will take time for housing to move out of sellers’ market conditions, so we do anticipate prices will continue to rise this year.”

Rising lending rates are expected to cool some of the demand later this year, but rates are still exceptionally low, supporting strong housing sales, especially from those who experienced increased savings and equity gains throughout the pandemic.  Lurie says economic improvements are also expected to support both job and population growth, adding new sources of demand for housing.

“Despite challenges with COVID-19, we are starting to see a turnaround in our job and migration numbers, and while interest rates are expected to rise, they remain relatively low. All these factors are expected to support strong housing demand into 2022.” – CREB® Chief Economist Ann-Marie Lurie. 

During the pandemic, supply has been a struggle for many industries, including the housing market. New listings have improved, but Lurie says it has not been enough to offset high sales levels, keeping inventories relatively low and likely limiting sales growth in the market. 

As we move through 2022, Lurie says new listings in the resale market should remain relatively strong thanks to higher home prices. At the same time, the new-home sector recorded a surge in starts last year, and the completion of those starts should help add to overall supply choice in the market.

Supply levels are expected to improve relative to demand this year, according to the report. However, conditions are expected to remain relatively tight throughout the spring market, supporting further price gains. 

As the market balance gradually improves, Lurie says upward price pressure in the housing market should ease. Overall, price growth is expected to ease to four per cent in 2022.

“While conditions in the housing market are expected to remain strong, there is a significant amount of uncertainty that could impact housing,” said Lurie. 

“If supply levels remain low relative to demand, we could see stronger-than-expected price growth. On the other hand, if rates rise much faster and higher than expected, it could cause a more significant pullback in sales.”

-CREB

Calgary Real Estate News

Bank of Canada Holds Interest Rate

The Bank of Canada announced today that it is keeping its key rate unchanged, noting that the global economy appears to be stabilizing with growth expected to edge higher in the coming years, although uncertainty relating to ongoing trade conflicts continues to be a risk. A resilient Canadian economy, with investment spending stronger than expected, has allowed the Bank to hold rates while many other countries have eased. Going forward the Bank’s rate decisions will be guided by negative impacts of trade conflicts against our sources of economic strength, which are consumer spending and housing.

The next rate-setting day is Wednesday, January 22nd.

Be sure to get in touch if you have questions about your mortgage strategy. It’s important to get advice and a personal assessment of your situation if you need a new mortgage, are renewing, looking to refinance for debt consolidation, renovations or other large expenditures.

We regularly receive short-term rate promotions that are not posted online, which means our rates change frequently. Please contact us for these unpublished rate specials.

Terms Posted Rates Our Rates
6 MONTHS 3.34% 3.30%
1 YEAR 3.59% 2.69%
2 YEARS 3.74% 2.69%
3 YEARS 3.89% 2.69%
4 YEARS 3.94% 2.69%
5 YEARS 5.34% 2.69%
7 YEARS 5.80% 2.89%
10 YEARS 6.10% 3.04%

Insured mortgage rates, subject to change. Conventional and refinance rates may be higher.
Some rates may not be available in all provinces. Consult a local Invis professional for more information. OAC. E&EO

 

Prime Rate 3.95%
5 yr variable 2.90%

 

Crunch the numbers and explore different scenarios with our website calculators.

-Invis

Calgary Real Estate News

Eight areas to monitor to protect your home’s value and avoid costly repairs.

Whether old or new, a home is an investment worth protecting.

“The difference between a house the owner has paid attention to and one they have not can be amazing,” said Mike Becker, a home inspector for Calgary and surrounding areas with Pillar to Post Home Inspectors.

Homeowners can maintain the value of their investment by monitoring these areas of the home:

1. Property and Site

“After buying a new home, the grade and property may be in a state of settling and the most important part of this will be drainage,” said Becker. “Mature lots will typically have good drainage, but should still be monitored, particularly after major runoffs or new landscaping.”Watch for:

  • Drainage must move away from the structure.
  • Monitor during snow melts and heavy rain.
  • Most newer lots require some regrading once they settle, sometimes five to 10 years out, but always monitor.

Investment:

  • Repairs = $3 to $6 per square foot.

2. Roof

Michael Babisky, general manager at Astoria Homes, said the top concern for Calgary homeowners should be regular roof inspections. “I recommend every three to six months, especially with the frequent wind and hail here.”Watch for:

  • Implement a regular maintenance schedule for shingles and flashings after five years.
  • Characteristics of shingles near the end of usefulness: curling up, rounded edges and granule surface wearing off.
  • Caulking usually lasts three to five years and should be refreshed.
  • Inspect after severe weather.

Investment:

  • Gutter cleaning = $150 to $300.
  • Gutter replacement = $7 to $9 per linear foot.
  • Asphalt replacement = $3 to $7 per square foot.

3. Exterior

“The majority of houses are being done with vinyl siding – a good, long-lasting material, assuming it has been installed correctly,” said Becker. “Wall covering, such as siding or stucco, nearing end of life are usually very apparent.”Watch for:

  • Loose or incorrectly fitted siding around openings, where moisture can reach the structure or wind might blow siding off. Seal holes with caulking and replace damaged pieces.
  • Exterior penetrations, such as those around gas lines/meters and furnace venting, require yearly re-caulking.

Investment:

  • Repairs = $5 to $6 per square foot.
  • Replacement can be more economical than repair costs.

4. Attic

“Typically, people are only accessing the attic if they are running wires or when something has already gone wrong, especially leaks,” said Becker.Watch for:

  • Condensation from the living area can build up and stain the ceiling, or worse. • Check for condensation when it’s cold outside. Look for signs of frost on the sheathing or around the attic hatch.
  • Over time, attic insulation can lose volume, reducing its R value. Improve thermal efficiency by adding more insulation.

Investment:

  • Insulation = $2 to $5 per square foot.

5. Structure

“Usually, if there are structural problems, they’re not something that can be fixed with maintenance,” said Becker. “But monitoring is best.”Watch for:

  • Doors not opening and closing properly anymore.
  • Cracks in finishing might indicate structural problems, but don’t always require action. Monitor over time for possible moisture penetration or foundational movement.

6. Electrical

“Nearly every do-it-yourself home renovation project I have seen (involving electrical) has safety issues,” said Becker. “Get an electrician, I cannot say this enough.”Watch for:

  • Mis-wired receptacles can damage electronics or cause shocks, sparks and/or fires.
  • Professional installations should be maintenance-free unless something fails, like a ground fault circuit breaker/receptacle. These should be replaced.
  • A very hot distribution panel might indicate problems. Don’t touch it, call an electrician.

Investment:

  • Repairs = $150 to $250 per hour, plus material costs.

7. Heating

“There will come a time when replacing the furnace heating system will be more economical than the repairs and maintenance, but I have inspected many houses with furnaces 25-plus years old that have been well maintained,” said Becker.Watch for:

  • Prior to winter each year, Becker suggests opening the front panels to take a picture of the furnace for yearly comparison. Water or rust indicate it might be time for inspection.
  • Yearly furnace cleaning is key to maximizing its life, Babisky says. “Clean the humidifier at the same time.”
  • Replace filters every six months.
  • After 10 years, implement a regular furnace maintenance schedule, with inspection by an HVAC professional.

Investment:

  • Annual service and cleaning = $250 to $500.
  • Furnace replacement = $3,600 to $4,700.

8. Plumbing

“Get leaks fixed as soon as possible,” said Becker.Watch for:

  • Leaks around slow-draining sinks, bathtubs and showers.
  • Less available hot water or the pilot light repeatedly going out. Repairs can often add years to appliances.
  • Water heaters typically last 10 to 15 years, but can fail at any time, usually unexpectedly.

Investment:

  • Repairs = $150 to $250 per hour, plus material costs.
  • Water heater replacement = $800 to $1000.

 

-Natalie Noble